Judge Rejects New Sale of Gallup Diocese Properties

By Olivier Uyttebrouck
Albuquerque Journal
October 8, 2015

http://www.abqjournal.com/656379/news/excerpt-but-judge-says-auctioneers-wrong-in-turning-away-reporter.html

A bankruptcy judge on Wednesday declined to order a new sale of properties belonging to the Diocese of Gallup even though auctioneers made an “error in judgment” by turning away a newspaper reporter and a graduate student from what had been billed as a public auction last month in Albuquerque.

U.S. Bankruptcy Judge David T. Thuma said that ordering a new auction could harm victims of sexual abuse by priests by reducing the money available to settle the diocese’s Chapter 11 bankruptcy case.

Auctions held last month in Albuquerque and Phoenix netted the diocese about $160,000 after fees were paid to real estate brokers handling the sales. As of June 30, legal and professional costs in the case had mounted to more than $2.6 million. Ordering a new auction “would cost money,” Thuma said at the end of a hearing in Albuquerque. “There is a risk that ordering a new auction would harm the creditors, who are abuse victims.”

Thuma scheduled the hearing last week after Elizabeth Hardin-Burrola, a reporter for the Gallup Independent, and Meredith Edelman, a doctoral candidate, sent him letters saying they had been barred from a Sept. 19 auction in Albuquerque.

Thuma said that although court proceedings generally are open to the public, “an auction is not a court proceeding. An auctioneer is not an officer of the court.” He also admonished the diocese’s attorneys to “err on the side of keeping this an open proceeding” as the 2-year-old case proceeds.

The Diocese of Gallup became the ninth Roman Catholic diocese to file for bankruptcy in 2013 in response to a growing number of lawsuits by people alleging that as children they had been sexually abused by clergy. In all, 57 alleged victims of sexual abuse have been identified as claimants in the case.

The diocese identified about three dozen properties for sale in Arizona and New Mexico to raise money to settle the case. Under a plan approved by Thuma, the diocese agreed to a flat fee of $45,000, plus 10 percent of sales prices, to real estate brokers Tucson Realty & Trust Co. and Accelerated Marketing Group of Newport Beach, Calif.

The two auctions in Phoenix and Albuquerque grossed a total of about $225,000, of which $20,656 was paid to the brokers. That figure, combined with the $45,000 flat fee, provides the companies with about $65,000.

Hardin-Burrola told Thuma that the auctioneer barred her and Edelman from the auction and told them that only “qualified bidders” were allowed to attend. None of the documentation about the auction indicated that members of the public could not attend, she said.

Lori Winkelman, an attorney for the diocese, told Thuma that public notice was provided about the auction and anyone who qualified as a bidder on properties was allowed to attend.

“A public auction means providing notice to the public,” Winkelman said. “Anybody who wanted to bid could participate.”